Finance Minister Enoch Godongwana delivered his highly anticipated budget speech in Parliament on Wednesday, March 12, unveiling tax measures that many believe will place further strain on struggling South Africans.
One of the most contentious announcements was a 0.5 percentage point increase in VAT for 2025, with another hike planned for the following year.
Ahead of the speech, the Congress of South African Trade Unions (COSATU), alongside various trade unions and civil society organizations, staged a demonstration outside Parliament. They called for a people-centered budget that prioritizes workers and struggling communities.
Reacting to the budget, COSATU Parliamentary Coordinator Matthew Parks expressed deep disappointment, arguing that the VAT increase and the lack of adjustments to personal income tax brackets would disproportionately impact lower- and middle-income earners.
“While we understand the economic challenges facing the government, increasing VAT over the next two years without adjusting personal income tax brackets is unacceptable,” Parks stated.
“Workers are already drowning in debt, their wages barely keeping up with inflation, and now they are being asked to shoulder an even heavier financial burden.”
Parks suggested that instead of increasing VAT, the government should focus on strengthening the South African Revenue Service (SARS) to improve tax collection, close loopholes, and ensure large corporations and the wealthy contribute their fair share.
Despite its concerns, COSATU welcomed certain aspects of the budget, including the public sector wage agreement, social grant increases, and investments in infrastructure.
However, the union urged Parliament to amend the budget by increasing the Social Relief of Distress (SRD) grant in line with inflation, allocating more resources to SARS, and reversing the planned VAT hike.
“We need a budget that protects the poor and working class. Placing the burden on those who can least afford it is not the solution,” Parks emphasized.
VOC News
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